Shelter Report on Rent Regulation

Last December with a triumphant fanfare the Private Rental Tenancy regime came into force as part of measures introduced by the Private Housing (Tenancies) (Scotland) Act 2016. While some may have lauded the provisions as enhancing the rights of tenants in the private rented sector, I, at the time, blogged on the fact that this legislation singularly fails to protect tenants who may face eviction for a whole range of reasons including one of eighteen statutory grounds contained in Schedule 3 of the Act [1].

Since 1999 the number of tenants in the private rented sector has tripled in Scotland.

We now find ourselves in the situation now where we have a growing part of the electorate living in a form of housing tenure, which they did not choose.

I therefore read with interest a report co-authored by Prof Douglas Robertson and Gillian Young and published by Shelter Scotland yesterday that evaluated rent regulation measures within the private rented sector [2].

It is a forensic and incisive piece of work.

Across Europe today, in places such as France, the Netherlands and Sweden, rent regulation is a typical part of any housing rental market.

In Scotland, the measures in place to curb rent increases include Rent Pressure Zones (RPZs) – a process, which the report’s authors akin to “a free market approach to ‘rent regulation’”. These were last minute additions to the Bill. But instead what we have is a derisory method of arbitration that bounces between Rent Officers and the First-Tier Tribunal who draw 97% of their data on rental prices from landlord adverts online and in the press.

This is completely ineffective.

But, tellingly, the authors note:

“The Government’s reasoning here is quite explicit: it does not want to see any loss of investor confidence. Protecting tenants from exploitation was secondary and consequently the impact of the RPZ measures is limited.”

Meanwhile, in Sweden, it is tenants' interests which are put first..

There, for example, there is a tenants’ union, which represents over half-a-million households on national policymaking as well as individual housing disputes. Part of their remit is to also collectively bargain rent controls for all members. As a collective, all members submit their rent prices to the union ensuring they are in the best position to negotiate with landlords [3].

While Scotland has modestly adopted a European style of private tenancy in Scotland, we don’t have the regulation mechanisms that are required to properly support such tenancies.

Crucially, we don’t have the data to facilitate European style private tenancies.

As the report argues,

“The lack of robust evidence could only be overcome if there was the political will to make sufficient resources available to produce a comprehensive and regularly updated private rental database that could inform national and local government policy processes”.

So whether you are a tenant seeking to appeal a rent rise or you are a local government official scoping out the possibility of declaring a RPZ then it’s evident that the legislation (in its current form) is utterly useless.

The Housing Minister therefore has two options to fix this mess. He needs to,

Collect accurate data that is fit for purpose and accurately reflects rents paid by existing tenants.

Deliver RPZs that respond to pressurised housing markets by not just controlling rents but by banning the exploitation of tenants as the spirit of the law intended.

Unless he does so then it’s clear that Scotland will not have a private rented sector that provides the kind of housing that is taken for granted in most other European countries..